It stands for mark-to-market margin; the amount of money (margin) that an investor/ trader must have or maintain, at all times, in its account to continue holding its position. In future trading, if the balance in the margin account drops below this level, the trader will receive a margin call from its respective broker requiring the immediate deposit of additional amounts to bring the account back to the initial margin level. This practice/ process is generally known as marking to market.

For example, trader has purchased a USD 50,000 worth of stocks, with an initial margin of 40%, while the mark-to-market margin was set at 70%. In monetary terms, the initial margin is:

Initial margin= 50,000 ×40% = USD 20,000

If the market value of stocks has decreased below the mark-to-market margin, e.g., below USD 14,000 (e.g., 13,000), then the trader must deposit the so-called variation margin cost; i.e. 20,000- 13,000= USD 7,000.

It is the additional amount a trader is required to deposit to its future trading account after the future position has dropped below the mark-to-market margin.

This is also known as maintenance margin.